Pertamina eyes alliances with foreign firms
Pertamina eyes alliances with foreign firms
KUALA LUMPUR (Dow Jones): Indonesia's state-run Pertamina plans to reshape its upstream operations following the passage of the oil and gas bill by forming alliances with foreign partners and aggressively participating in domestic and overseas oil and gas projects, Gatot K. Wiroyudo, senior vice president of Pertamina's upstream operations said Tuesday.
"Currently, Pertamina produces 180,000 barrels (a day) of oil equivalent, which includes gas," Gatot said on the sidelines of the three-day Sixth annual Asia Oil and Gas Conference in Kuala Lumpur.
"We will acquire reserves not necessarily domestic and also through cooperation with foreign firms," he added.
Gatot reiterated that Pertamina aims to become Indonesia's second largest oil producer within five years, which he said will require Pertamina raising its production capacity by 40% within that time frame.
PT Caltex Pacific Indonesia, a joint venture between Chevron Corp. and Texaco Inc., is the country's largest oil producer with a total production capacity of about 700,000 barrels per day. Indonesia's crude output in May averaged 1.234 million barrels per day.
During a conference panel discussion Tuesday, Gatot said Pertamina is looking for ways to develop projects in cooperation with Malaysia's Petroliam Nasional Bhd., or Petronas, and Indian Oil Corp.
"We will seek bilateral and multilateral cooperation in this sector," he said.
He said Pertamina will consider oil and gas exploration and production projects in North Africa, the Middle East and Southeast Asia.
Pertamina's President and Chief Executive Baihaki Hakim said Monday that he expected the Indonesian Parliament to make a final vote on the oil and gas bill aimed at opening the country's downstream sector to competition and privatizing Pertamina in August. However, most analysts believe this is likely to occur in the late third or fourth quarter this year at the earliest.
Once the oil and gas bill is ratified, Pertamina will no longer supervise Indonesia's production sharing contracts; it will be competing with international oil majors for the same contracts.
Gatot said the blueprint for the restructured oil and gas industry also allows for participation of the provincial governments and won't require any adjustment in production sharing contracts.
"I visualize that when we develop a production facility or pipelines, we will need a certain parcel of land; a certain degree of involvement by the local government at the operational level is seen," he said. "A certain degree of ownership from the local provincial government is needed to maintain and keep security."
Gatot said Indonesia currently holds recoverable oil reserves of 9 billion-10 billion barrels, reiterating Baihaki's remarks Monday that by 2005 to 2006 Indonesia's oil production and capacity will dry up.
"The Indonesian domestic market is increasing by 7% a year, so sooner or later, we will be a (net) importer rather than exporter of crude oil," Gatot said.
Baihaki said Monday during a panel discussion that Indonesia "naturally, in that case...shouldn't be a member of the (Organization of Petroleum Exporting Countries)."
When asked if Pertamina was concerned that provincial unrest would frighten away foreign investment into Indonesia's upstream sector, Gatot said the disturbances were temporary and expected to be resolved in the next few months.
ExxonMobil Oil Indonesia Corp., a unit of Exxon Mobil Corp. (XOM), shut operations at its Arun gas field in early March citing disintegrating security in restive Aceh province.
Caltex Indonesia has seen production disrupted by strikes, blockades of facilities and theft of equipment over the past 18 months. Caltex, which operates on the island of Sumatra, says that villagers steal about $1 million of power cables, pipe and aluminum sheeting on pipelines each month. Last year, Caltex estimates that theft cost the company $300 million of oil production, and this year the company forecasts an increase to $500 million.